BENJAMIN YU, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION and JADE MOUNTAIN PRODUCTS

COMPANY LIMITED, WILLY CO, RHODORA D. BENDAL, LEA BENDAL, CHIU SHIAN JENG and CHEN HOFU, respondents.
G.R. No. 97212 | June 30, 1993 | Feliciano, J.
FACTS: Petitioner Benjamin Yu was formerly the Asst. General Manager of the marble quarrying and export business
"Jade Mountain Products Company Limited". The partnership was originally organized by Respondents (all Taiwanese
citizens
According to petitioner Yu, he only actually received half of his stipulated monthly salary (P4K), and will be paid when the
firm shall have secured additional operating funds from abroad. He actually managed the operations and finances of the
business; he had overall supervision of the.
Sometime in 1988, without the knowledge of Yu, the general partners Lea and Rhodora Bendal sold and transferred their
interests in the partnership to private respondent Willy Co and to one Emmanuel Zapanta. Mr. Yu Chang, a limited partner,
also sold and transferred his interest in the partnership to Willy Co. The partnership, now constituted solely by Willy Co
and Emmanuel Zapanta, continued to use the old firm name of Jade Mountain, though they moved the firm's main office
from Makati to Mandaluyong.
Having learned of the transfer of the firm's main office from Makati to Mandaluyong, petitioner Benjamin Yu reported to the
Mandaluyong office for work and met private respondent Willy Co for the first time. Petitioner was not allowed to work
anymore in the Jade Mountain business enterprise. His unpaid salaries remained unpaid.
Benjamin Yu filed a complaint for illegal dismissal and recovery of unpaid salaries against Jade Mountain, Mr. Willy Co
and the other private respondents. The partnership and Willy Co denied petitioner's charges, contending in the main that
Benjamin Yu was never hired as an employee by the present or new partnership.
LA held that petitioner had been illegally dismissed and ordered his reinstatment.
NLRC reversed saying that the new partnership had not retained petitioner Yu and that there was no law requiring the new
partnership to absorb the employees of the old partnership. NLRC held that Benjamin Yu's claim for unpaid wages should
be asserted against the original members of the preceding partnership.
Petitioner: A partnership has a juridical personality separate and distinct from that of each of its members. Such
independent legal personality subsists notwithstanding changes in the identities of the partners.
ISSUES: (1) whether the old partnership had been extinguished - Yes
(2) whether petitioner Yu can assert his rights against the new partnership Yes, pursuant to Art 1840
RATIO: (1) Here, just about all of the partners had sold their partnership interests (amounting to 82% of the total
partnership interest) to Mr. Willy Co and Emmanuel Zapanta. This, coupled with the retirement or withdrawal of the
partners who had originally owned such 82% interest, was enough to constitute a new partnership. [Arts 1828 and 1830]
However, it does not automatically result in the termination of the legal personality of the old partnership. Article 1829
provides that: on dissolution, the partnership is not terminated, but continues until the winding up of partnership affairs is
completed.
It is important to underscore the fact that the business of the old partnership was simply continued by the new
partners, without the old partnership undergoing the procedures relating to dissolution and winding up of its business
affairs.

(2) Not only the retiring partners (Rhodora Bendal, et al.) but also the new partnership itself which continued the
business of the old, dissolved, one, are liable for the debts of the preceding partnership. [see Art 1840 - where creditors of
the dissolved partnership are also creditors of the person or partnership continuing the business]
Under Article 1840, creditors of the old Jade Mountain are also creditors of the new Jade Mountain which continued the
business of the old one without liquidation of the partnership affairs. It is clear that Benjamin Yu is entitled to enforce his
claim for unpaid salaries, as well as other claims relating to his employment with the previous partnership and against the
new Jade Mountain.
It is at the same time also evident to the Court that the new partnership was entitled to appoint and hire a new general or
assistant general manager to run the affairs of the business enterprise take over. The non-retention of Benjamin Yu as
Assistant General Manager did not therefore constitute unlawful termination. We think that the precise authorized cause
for termination in the case at bar was redundancy. The new partnership had its own new General Manager, apparently Mr.
Willy Co, the principal new owner himself, who personally ran the business of Jade Mountain. Therefore, petitioner
Benjamin Yu is entitled only to separation pay. But because Mr. Yu was shabbily treated, moral damages are proper, plus
applicable interests.
WHEREFORE, petition is GRANTED.